Weekly Feed Market Commentary

Published 22 April 15

Feed Grains

With the May contract on UK feed wheat futures coming to a close, attention is squarely on the Nov-15 contract for market direction. UK Nov-15 feed wheat futures closed at a six and a half month low on Tuesday (21 April) at £124.35/t, down £3.90/t from the previous Tuesday’s close.

Paris Nov-15 maize similarly fell £3.22/t on the week to close at £122.72/t. This has left the difference between UK feed wheat and Paris maize futures now looking very narrow at less than £2/t versus the £3-£5/t of recent months. If this narrowing remains then it could be supportive of UK feed wheat exports in 2015/16, something that has been very sluggish this season.

Markets have been on ‘weather watch’ recently with all eyes on how spring weather could potentially be impacting on the size of crops for harvest in 2015. After a period of dryness, showers and storms hit some key US hard red winter wheat growing regions last week, which were welcomed for improving soil moisture and creating more favourable conditions for the growing crop. Nonetheless, the latest US crop condition report, released on Monday night, showed very little change in US wheat conditions.

Elsewhere, good weather and sowing conditions have led the German association of farm cooperatives to raise its forecasts for the size of the wheat harvest in 2015 from estimates made in March to 26.72Mt.

In contrast, current estimates of the size of Ukraine's barley crop could be revised down after insufficient sowing progress recently. UkrAgroConsult have indicated that if temperatures rise and soil moisture falls rapidly then there will be no point sowing more barley, which could lead to a smaller crop than previously anticipated. However, this might point to more land being available for the later sown maize crop.

On the trade front, sales of EU soft wheat returned to more typical levels in the week ending 15 April, with 741Kt of licenses granted (compared with only 189Kt in the previous week). At 26.4Mt, cumulative wheat exports are now 2.1Mt more than they were at the same point last year. Strong demand from Asia for EU feed wheat, as well as demand for EU milling wheat by Saudi Arabia and Morocco has helped to raise Strategie Grains’ forecast for EU soft wheat exports to a record 32Mt in 2014/15. However, the return of competitively priced Russian wheat to world export markets this week could signal greater competition for demand in the remainder of the season, which could put pressure on EU wheat prices to remain competitive.

Protein Meal

UK rapemeal prices (34%, ex-mill, Erith) rose £6/t on the week to £187/t on Friday (17 April), while soyameal (Hi pro, ex store, east Coast) fell £5/t to £306/t. This has left soyameal at its cheapest level in over 3 years.

There have been various reports of good oilseed demand levels from across the globe in the past week, potentially indicating strong supplies of the products of oilseed crushing including protein meals. US soyabean monthly crush data for March, at 4.4Mt, was the fourth highest on record and 0.2Mt above the average trade estimate in pre-report Reuters’ poll

Export demand for old crop US soyabeans also showed some recovery according to the latest USDA export sales data, with US soyabean export commitments reaching 48.5Mt for the week ending 9 April, over 300Kt higher than the previous week. This follows two weeks of lacklustre progress.

The South American soyabean harvest continues, with the Rosario Grains Exchange revising its estimate for 2014/15 Argentine soyabean production 1Mt higher to 59Mt. According to the Buenos Aires Grain Exchange’s latest crop report, the Argentine harvest was 33% complete as at 16 April. However, there comes a point where, with large crops already known to be in the pipeline, further upward revisions to Argentine crops possibly become of little surprise to markets.